Real Estate Analysis and Commentary in WINTER HAVEN

Dave Hohman Bloging with the Appraiser Coach

May 5th, 2016 11:36 AM

Recently, I have been on the Appraiser Coach, Dustin Harris, web site and responding to some of the appraisal related comments provided by him and other participants. Below is one of my responses to the whining by other appraisers about low fees and the increased scope of work for residential assignments. Read on and let me know if you have a comments.

Dustin is right on point about the increase in productivity in the residential business. The use of mobile technology has been a game changer. I’ve been in the biz over 36 years, doing commercial, eminent domain and now residential. There are two things you have to do today to maximize you financial return as Dustin has indicated. They are “employ the law of delegation” and use every piece appraisal related technology that you can get. If you think you are a $100/hr guy or gal, why are you doing things that can be done by a $10 to $15/hr person? Why are you still paying for paper and file storage when electronic file storage is virtually free? Enough of my rant on the expense side.

On the income side, lets talk about why fees are low in some markets. Having worked for Rels Valuation for about a year and half as staff appraiser during recent housing depression in Florida, I have a very good understanding of how the big guys operate at the appraiser level. Their fee structure is ALL about supply and demand with there staff guys and the contract folks. As long as there are people willing to provide appraisal services at $255 a pop, they will keep hiring those folks. When those guys get to busy and can’t meet the Rels deadlines, the $350 guys get the assignment. When they are too busy, guys like me get hired. Also, as long as they can find staff guys to work 60 hours a week, they will keep their pay structure right where it is. When I worked with them, they had about 80 appraisers in Florida.

As far as scope creep goes, it is your time and their money in completing the assignment. Those of us who have done eminent domain work in Florida understand what is going on now with this residential business. We’ve had the seemingly endless review process to deal with forever particularly at the State level. The result was that the fees just kept getting higher and higher because the time to complete the assignments just kept getting longer and longer. Of the AMC’s I deal with, the “creep” has been strongest with Rels. As a result, I have had to increase my fees in order to cover my time expense. Sure, i get fewer assignments from them. However, I still get assignments at a fee equal to the retail cost to the borrower and that is meeting the time expense requirement. Guys and gals we’re not their employees. We are business owners. Many of you need to snap out of the victim mentality. Take a look at how your are operationcompetes with others in your market. Perhaps some of you need to move on to greener pastures.